Winter lamb price spike no guarantee
The odds slightly favour a boost to winter lamb prices, but usually coming off a dry season, unlike this year.
HISTORICAL price data shows the odds of a winter price premium for lambs does favour farmers, but it is certainly not guaranteed.
During the past decade there have been four years in which the average saleyard price for heavy slaughter lambs sold in February was actually higher than what was achieved in June and July.
As the industry steps into autumn it is an interesting talking point, as there is so much anticipation about how high livestock prices could go this winter.
For lamb in particular there is some fresh information on recent slaughter and production levels that need to be considered in the bigger picture of all the hype around an impending shortage in coming months.
The Australian Bureau of Statistics released its official slaughter figures late last week.
It had Australia’s national lamb slaughter in the December quarter at 5.4 million head – the lowest number processed in the key spring period (September to December) for seven years. Tie this in with weather patterns and this is where the historical figures get interesting in terms of summer to winter pricing for lambs.
Over the past decade, only in 2011 and 2012 were lamb prices better in late summer compared to June/July.
Data from Meat and Livestock Australia had the average for heavy lambs in February 2011 at 615c/kg carcass weight, with the average for July lower at 464c/kg.
The seasons 2010 and 2011 were a La Nina event, bringing high rainfall and floods.
Another year where there wasn’t a great premium set for lambs in the winter was 2015 when heavy lambs averaged 554c in February and 587c/kg in July. The BoM lists above average summer rainfall across Australia during that season.
As a general rule, the big price gains from summer to winter have been recorded during dry years, the notable one being in 2019 when heavy lambs went from 648c in February to average a record 967c/kg cwt in July.
Yet there are a lot of factors that feed into market performance in any given year, and 2020 was a case in point. MLA figures had lambs at a high 884c/kg in February, dipping to an average of 628c/kg in July due mainly to the whole COVID-19 debacle and confidence hit to markets.
But as a simple analysis of the past decade, a wet spring and summer — which is what the industry is currently coming out of — doesn’t necessarily correlate into big winter money for lambs.
A key question for farmers is whether the very low lamb slaughter of recent months is further evidence of the overall shortage of stock, or possibly a sign that more lambs have been carried over to take advantage of feed and to add weight.
Latest ABS production figures confirm how more weight is being added to lambs. The average carcass weight for lambs processed in NSW during the December quarter was 25kg, and in Victoria 24kg.
To sum up, in six of the past 10 years farmers who have sold lambs in the winter have received a better carcass price than now.
But there is no guarantee. Points added to the argument this week included:
THAT many processors were on reduced kill schedules and extended maintenance shutdowns could be on the cards;
AFTER such a good season and a bank of feed ahead of them in NSW, sucker lambs should be available early this season, some buyers are already talking of a mid-July start which would take some of the demand pressure off old lambs; and
IT is likely northern farmers are holding high priced and light lambs bought in the spring to add more weight to help create a profit margin.
To end on a positive, the bank of feed and stored grain and hay means lamb turn-off is likely to stay controlled this autumn and winter at least, which should help keep prices consistent and not give as much chance for processors to discount.
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